FW: [CPEO-BIF] On Brownfield Subsidies ...

[Evans Paull <epaull@nemw.org>]

I've been following this debate with considerable interest.

Yesterday, someone in the exchange suggested that the "Good jobs first"
group has done a lot of work in this area and have created some good
models.  As some of you may know "Good Jobs First" is a labor-backed
group which advocates for a development and job incentives to be linked
family-supporting/living wages and health benefits.  Not a bad idea in
concept, but try implementing it - nightmare.

Those of us who are toiling away trying to make government work need to
aware of what I'll call "the cumulative negative effect of good
intentions."  

I once attended a meeting where a City Councilman arrived about 45
minutes late.  He explained, in great frustration, "The wheels of
government move so slowly that it's sometimes surprising that we get
anything done."  The substance of the meeting involved a proposal to
link development and business incentives to green/sustainable
development requirements.  Also not a bad idea, but I had to ask myself,
'isn't there a relationship between the wheels of government moving
slowly and this well-intentioned requirement that incentives be linked
to sustainable development? 

In the same time frame I was on an affordable housing task force.
Affordable housing advocates wanted to require that if any new
residential development in the City received any form of public subsidy,
the developer would be required to provide some percentage of affordable
units.  Seems reasonable, right?

Then I moved to my current job at Northeast-Midwest Institute, and I
have since heard proposals for two more public benefit linkages: one for
an environmental justice review of projects that are awarded certain
brownfields incentives; and another that would require that all CDBG
expenditures be reviewed for whether public money is being used to pay
for a cleanup for which a responsible party may be on the hook.

In isolation each of these makes some degree of sense, but, when you put
them all together, you've got to say, "Hold on here - if the wheels of
government move slowly now, just wait till we adopt all these
requirements."  

My message is beware of THE CUMULATIVE NEGATIVE EFFECT OF GOOD
INTENTIONS.
    

Ev Paull, Senior Policy Analyst
Northeast Midwest Institute
218 D Street, SE
Washington, DC 20003
202-464-4004
cell 410-979-7103
epaull@nemw.org
www.nemw.org 

-----Original Message-----
From: brownfields-bounces@list.cpeo.org
[mailto:brownfields-bounces@list.cpeo.org] On Behalf Of Bruce-Sean
Reshen
Sent: Thursday, November 02, 2006 7:58 PM
To: 'Peter B. Meyer'; brownfields@list.cpeo.org
Subject: RE: [CPEO-BIF] On Brownfield Subsidies ...

Peter,

Everything you said I concur with.  Now that we had dispensed with the
finer points, there remains the central issue of subsidies.  The smaller
picture issues concern the justification for subsidies, the basis for
distributing subsidies and the determination of the mix of various
subsidies for a given project.  But our major focus should be on the big
picture issue.  How should communities develop a strategy to
simultaneously remediate contaminated sites, encourage community
revitalization and build smart growth externalities into the plan?  

We should not be focusing solely on the minutia of whether or not a
developer will earn large profits.  We need to focus on how to produce
large public benefits for communities in each project.

It's the vision thing folks!

Bruce

Bruce-Sean Reshen
CEO, The MGP Group
733 Summer Street - Suite 405
Stamford, CT 06901
p. 203-327-2888, X18
f.  203-327-2999
c. 917-757-5925
breshen@mgppartners.com
www.theguardiantrust.org
www.mgppartners.com



Bruce-Sean Reshen
p. 203-259-1850
c. 917-757-5925

-----Original Message-----
From: brownfields-bounces@list.cpeo.org
[mailto:brownfields-bounces@list.cpeo.org] On Behalf Of Peter B. Meyer
Sent: Thursday, November 02, 2006 2:54 PM
To: brownfields@list.cpeo.org
Subject: [CPEO-BIF] On Brownfield Subsidies ...

Well, friends, we're getting there ... we might even gain some consensus

in Boston, and Barry is right about small differences ... and I am 
looking forward to our conversation!

Bruce is right ... I am back, and the return is from England, where I've

been working on their 'brownfields' - which are a bit different: any 
previously developed land, not necessaily tinged with contamination 
concerns. They're pursuing a "triple bottom line" in a lot of their 
work, trying to articulate and then meet environmental, social AND 
economic objectives on each project.  But their logic and approach 
involves "regeneration" of AREAS, not just sites, so off-site impacts 
are central to their thinking -- and have been to mine for a while, now.

Bruce is also right that most brownfields are in places with populations

of 50,000 or more-- but that does not  mean there is not waste  (and 
wasteful precedents) in smaller settings. More importantly, my comment 
on the capacity of local governments to conduct the analyses recommended

in this discussion was underscored by Ignacio -- who has done wonders in

Emeryville, buoyed up by the exceptional property values in the Bay
area..

One economic datum that even small municipalities can, and do, track -- 
because they have to, and often because the records are maintained by 
the counties in  which they are located -- is the value of the real 
estate within their borders. They rely on property taxation for much of 
their revenues, so property values are known. But they rarely use that 
information to make subsidy decisions, except for those few places that 
have applied a Tax Increment Financing or TIF logic to their brownfield 
subsidy decisions, whether or not their states have granted formal TIF 
powers to localities.

When the economic benefits of the off-site impacts of mitigating highly 
visible brownfields are taken into consideration, it is possible that 
subsidies are TOO LOW, given the returns from some projects. This 
statement presumes that the social equity and environmental impacts of 
the project are not so negative as to undermine the purely economic 
returns to the public -- other property owners in the neighborhood -- 
and to the local public coffers.

(I offer this observation about subsidy levels to make clear that I am 
not opposed to supporting brownfield redevelopment at all. My concern is

for efficiency in assuring public returns for the expenditure of public 
resources on projects driven primarily by the pursuit of private profit 
on the part of the developers. So, certainly, Barry's comment that he 
and I are not as far apart as my straw men miht have implied is
accurate.)

There are very few studies out there that provide any solid data on the 
off-site property value impacts of brownfield redevelopments..(The 
little evidence I know of, in fact, deals with other contaminated land 
reclamations -- RCRA, BRAC, Superfund -- more than with brownfields.) If

we had such data -- and developed ways of measuring related social and 
environmental impacts off site -- then we might be able to offer the 
smaller municipalities-- those with less than 250,000 populations, let's

say, a set of yardsticks for measuring the returns on projects and thus 
for setting maximum subsidy levels. 

The actual amount of subsidy should, however, depend not on the returns 
to the public but the need to make the developer "whole" with respect to

the risk-adjusted return on investment from the project. Tis would mean,

for example, that the subsidies Ignacio might offer in a hot property 
market such as Emeryville in California should be expected to be lower 
for a project with the same  physical characteristics than would be 
necessary somewhere closer to Bruce or Barry -- in depressed old mill 
towns in Connecticut or elsewhere in New England. That leaves us with 
the problem of determining the appropriate subsidy in a context in which

-- unlike in the United Kingdom -- it is considered inappropriate to ask

a developer to open its books to show the need. We have to change that 
information provision climate if we are to use our public resources 
efficiently.

A few odd points, responding to comments made by others since my last 
rant ...

1. Barry argues that "we should not impose a bureucratic police 
procedure that will discourage development..." -- I agree fully, and 
never proposed one. Claw-backs can involve little or no uncertainty over

terms, and minimal bureasucracy. The economic development ones I have 
seen included conditions such as "show you've met X% of your target job 
creation (as target you defined when applying for your subsidized loan) 
or the interest rate subsidy on you loan falls by Y for every target 
range you failed to attain."  Yes, there is market risk here, but  no 
additional uncertainty.

2. I'm  no LEED expert and will not enter into that discussion ... but 
the logic of something like te Austin Smart Growth Index is appealing, 
assuming it can be mad eusable by lots of other communities, adapted to 
their situations and easily operationalized on a spreadsheet with local 
data.
The first step down this path, it seems to me, is getitng some handle on

off-site property value impacts from different types of redevelopments 
on brownfields of different sizes.

3. Bruce's discussion of a developer competing with other developers to 
do a brownfield is an accurate picture of  one small subset of 
brownfield redevelopments, those for which some local public or 
public/private development body has obtained property and is soliciting 
a master developer to remediate and redevelop. In a rarer case, 
developers may be competing for sites from major firms that have 
mothballed properties or placed conditions on redevelopments. But in 
interviews with many brownfield redevelopment specialists dating back to

1999, I have repeatedly heard "we will not do projects on publicly owned

land; the local governments set too many conditions."   For may 
redevelopers, then, there is no competition to get public approval of 
them as te developers, so his description of process is a bit skewed.

4. And, of course, Lenny is right -- there are many different kinds of 
subsidies, with different objectives, and means of providing support. 
That is why any spreadsheet for calculating appropriate support needs to

include provisions for weighting of different economic, social and 
environmental objectives. Certainly, those weights will be determined in

a local political -- that is,  not objective -- manner, but the 
spreadseet might then help the locality to get the biggest "bang" in its

terms from the brownfield redevelopment resources it commits to 
supporting private projects.

... and that is what I believe we all want to see happen ...

Peter
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